TEAM CODE: TC 35

NATIONAL MOOT COURT COMPETETION, MARWADI UNIVERSITY, 2021

BEFORE THE HONBLE CITY CIVIL COURT, MUMBAI

M/s DEF HOSPITALITY

(APPELLANT)

V.

ABC TEXTILES PRIVATE LIMITED

(RESPONDENT)

MEMORIAL ON THE BEHALF OF RESPONDENT

 VIRTUAL NATIONAL MOOT COURT COMPETETION, MARWADI UNIVERSITY
MEMORIAL ON BEHALF OF THE RESPONDENT

TABLE OF CONTENT
1. INDEX OF AUTHORITIES …………………………………………………. 3
[A] CASES
[B] STATUTES
[C] BOOKS
[D] WEBSITES

2. STATEMENT OF JURISDICTION………………………………………..4
3. STATEMENTS OF FACTS. ……………………………………………….…5
BACKGROUND
INTRODUCTION OF CONTRACT
SEQUENCE OF EVENTS…...6
FILING OF SUIT……………………………………………….….………… ...6
4. ISSUE RAISED…………………………………….……………………………8
5. SUMMARY OF ARGUMENTS……………………………………………...…9
6. WRITING PLEADINGS……………………………………………………..…11
ISSUE 1
ISSUE 2
ISSUE 3
7. PRAYER………………………………………………………………….……….17

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TABLE OF AUTHORITIES

[A]. CASES


[B]. CONSTITUTIONS &STATUTES

 The Indian Contract Act, 1872
 The Sale of Goods Act, 1930

[C]. BOOKS
 Bangia R.K., Sale of Goods Act
 Partnership Act & Sale of Goods Act – Dr. S.K. Kapoor
 Bangia R.K. Business Law
 Avtar Singh – Contract and Specific Relief

[D]. WEBSITES


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 VIRTUAL NATIONAL MOOT COURT COMPETETION, MARWADI UNIVERSITY
MEMORIAL ON BEHALF OF THE RESPONDENT

STATEMENTS OF JURISDICTION

The Plaintiff humbly submits this memorandum for the suit filed before this Honourable
Court. The suit concerning “breach of contract and related issues” is filed in the City Civil
Court in accordance with the Section 9 of the Civil Procedural Code; the Court has the
jurisdiction to decide all the matters referred to it for decision.
Both the parties shall accept the Court’s decision as final and binding and execute in good
faith.

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STATEMENTS OF FACT

BACKGROUND

“ABC Textiles Private Limited (‘ABC Textiles’) is a major manufacturer of bedsheets, hand
towels and bath towels with its registered office in Mumbai. It boasts some of India's top
hotels and resorts as its esteemed clients that purchase the same via yearly bulk orders. In
January 2020, M/s DEF Hospitality (‘DEF’), one of the largest chains of hotels in the
country, placed a yearly bulk order of bed sheets, hand towels and bath towels totalling INR 1
Crore.

CORE OF CONTRACT

DEF shared its standard procurement contract with ABC Textiles and it signed the same. The
contract did not have an aggregate liability cap. It also did not have a clause disclaiming
liability of either party for indirect or consequential losses or damages, loss of profits, loss of
reputation and loss of business.
The order was required to be delivered in two lots –
(i) first lot comprising 80% of the order value that was needed to be delivered in
February 2020; and
(ii) The second lot comprising the remaining 20% of the consignment value that was
required to be delivered in June 2020.
The contract had a penalty of 20% of the relevant consignment lot value if the quality was
substandard and did not meet the specific quality requirements mentioned in the contract.
The contract also had a penalty of INR 10,000/- for every week of delay in consignment
delivery. The contract also had a force majeure clause i.e. neither party was liable for factors
beyond its reasonable control like act of good, flood, earthquake etc. However ‘pandemic’
was not expressly mentioned in the force majeure clause. The contract had a termination
clause that stated that a party may terminate the contract for cause if the other party commits
a material breach of its obligations. The contract also mentioned that timely delivery of the
consignment lots was the essence of the contract.

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SEQUENCE OF EVENTS

ABC Textiles delivered the first lot on time and the timely delivery of the consignment was
appreciated by DEF. As per the terms of the contract, DEF paid for the first lot in full within
fifteen (15) days of receipt of the delivery. However, around mid-February 2020, some of the
local news media and local newspapers in Mumbai reported that guests in DEF’s flagship
hotel in Mumbai had reported about the poor quality of the hand towels and bath towels.
Some of the customers had also uploaded pics and videos on social media platforms
highlighting the poor quality of the hand towels and bath towels. Further, with the onset of
COVID-19 and the resultant lockdown imposed in India around the last week of March
2020, ABC Textiles could not import cotton fabric of the requisite quality to meet the quality
requirements under the contract and also started facing labour availability constraints.
Realizing that it will not be able to meet the June 2020 deadline, ABC Textiles wrote a letter
bringing the matter to the notice of DEF and requested for an extension of time during the
lockdown period to meet the delivery commitment for the second consignment.
However, DEF did not bother to reply to the said letter. ABC Textiles also send multiple
emails to the said elect but there was no reply from M/s DEF Hospitality. In June 2020, DEF
sent a letter to ABC Textiles stating the delay in delivering the second lot and highlighted the
poor quality of the first consignment and cancelled the contract with immediate effect.

FILING OF SUIT

DEF filed a suit against ABC textiles claiming –

(i) Rs. 16 lacs towards 30% penalty on account of poor quality of the first
consignment lot;
(ii) Rs. 25 lacs as damages on account of non-delivery of the second lot; &
(iii) Rs. 10 lacs as damages for loss of business, loss of revenue and loss of goodwill
due to the circulation of videos and posts of poor towel quality in the news and
social media.

ABC Textiles challenged the claim stating that –

(i) It was not bound to pay either the 30% penalty or the claim of Rs.10 lacs as the
first consignment was of good quality and had been accepted by DEF on delivery;
(ii) The delay in delivery of the second consignment was due to COVID-19 and
resultant lockdown by the Central Government and hence the same was a Force
Majeure event; and
(iii) The procurement price of cotton towels has fallen by at least 20% due to the
severe economic impact of COVID-19 pandemic and hence DEF had not soured
any loss due to its inability to deliver the second consignment.

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 VIRTUAL NATIONAL MOOT COURT COMPETETION, MARWADI UNIVERSITY
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ISSUE RAISED

I.

WHETHER WE ARE NOT BOUND TO PAY EITHER 20% PENELTY OR CLAIM OF

RS 10 LAKHS AS THE FIRST CONSIGNMENT WAS OF GOOD AND STANDARD
QUALITY AND HAD BEEN ACCEPTED AND APPRECIATED BY DEF ON
DELIVERY.

II.
WHETHER THE DELAY IN DELIVERY OF THE SECOND CONSIGNMENT WAS
DUE TO COVID-19 AND RESULTANT LOCKDOWN BY THE CENTRAL
GOVERNMENT AND HENCE THE SAME WAS A FORCE MAJEURE EVENT.

III.

WHEATHER THE PROCURMENT PRICE OF COTTON TOWELS HAS FALLEN BY

ATLEAST 20% DUE TO SEVERE ECONOMIC IMPACT OF COVID-19 PANDEMIUC
AND HENCE DEF HAD NO SUFFRED ANY LOSS DUE TO INABILITY TO
DELIVER THE SECOND CONSIGNMENT.

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SUMMARY OF ARGUMENTS

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WRITTEN PLEADINGS

ISSUE I.
WHETHER WE ARE NOT BOUND TO PAY EITHER 20% PENELTY OR CLAIM OF
RS 10 LAKHS AS THE FIRST CONSIGNMENT WAS OF GOOD AND STANDARD
QUALITY AND HAD BEEN ACCEPTED AND APPRECIATED BY DEF ON
DELIVERY

ABC textiles came in to a contract with the hospitality to deliver hand towels bed sheets and
bath towels for a consignment worth 1 crore. In February 2020 we delivered consignment of
worth 80% of the total amount which was in accordance with the description of standard
quality mentioned in the contract by DEF itself. And timely delivery of the consignment was
also appreciated by DEF while receiving. And now three months later a suit has been filed
that by DEF Hospitality that the product was of sub- standard without any communication
with ABC Textiles. Even if we look at the alleged defamation by their guests due to quality
of products delivered by ABC Textiles in first consignment happened in mid February and
after that no communication was made from DEF Hospitality and a suit is filed directly

ISSUE II.
WHETHER THE DELAY IN DELIVERY OF THE SECOND CONSIGNMENT WAS
DUE TO COVID-19 AND RESULTANT LOCKDOWN BY THE CENTRAL
GOVERNMENT AND HENCE THE SAME WAS A FORCE MAJEURE EVENT

ABC textiles came in to a contract with the hospitality to deliver hand towels bed sheets and
bath towels for a consignment worth 1 crore. In February 2020 we delivered consignment of
worth 80% of the total amount which was in accordance with the description of standard
quality mentioned in the contract by DEF itself. And timely delivery of the consignment was
also appreciated by DEF while receiving. And the second lot comprising the remaining 20%
of the consignment value that was required to be delivered in June 2020.The contract also had
a force majeure clause i.e. neither party was liable for factors beyond its reasonable control
like act of good, flood, earthquake etc.
Further, with the onset of COVID-19 and the resultant lockdown imposed in India around the
last week of March 2020, ABC Textiles could not import cotton fabric of the requisite quality

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to meet the quality requirements under the contract and also started facing labor availability
constraints. Realizing that it will not be able to meet the June 2020 deadline, ABC Textiles
wrote a letter bringing the matter to the notice of DEF and requested for an extension of time
during the lockdown period to meet the delivery commitment for the second consignment.
However, DEF did not bother to reply to the said letter. ABC Textiles also send multiple
emails to the said effect but there was no reply from M/s DEF Hospitality.
In June 2020, DEF sent a letter to ABC Textiles stating the delay in delivering the second lot.
But ABC Textiles already send multiple emails to the said effect but there was no reply from
M/s DEF Hospitality. Due to COVID-19 and the resultant lockdown imposed in India around
the last week of March 2020, undoubtly there was no possibility that ABC Textiles could
import cotton fabric of requisuite quality to meet the quality requirements under the contract
and ABC Textiles is major manufacturer of India, and honoured with great fame in textile
manufacturing sector just because of it’s quality and finishing. and they are also started
facing labor availability constraints.
Now , M/s DEF Hospitality is claiming Rs. 25 lacs as damages on account of non-delivery of
the second lot; and they are not considering the issue of FORCE MAJEURE EVENT which
is already mentioned in contract. In the COVID-19 context, terms such as “disease”,
“epidemic” and “pandemic” which are often listed as force majeure events are a natural
starting point when it comes to seeking relief. Other less obvious, but equally common, terms
such as “natural disaster” and “Act of God” may also cover COVID-19 impacts. However, it
is often the steps which have been taken by governments and other authorities in response to
COVID-19 which actually prevent or hinder contractual performance rather than the virus
itself. In these circumstances, if the clause includes wording such as “government acts” or
similar this may be a better ground to rely on.

ISSUE III.
WHEATHER THE PROCURMENT PRICE OF COTTON TOWELS HAS FALLEN BY
ATLEAST 20% DUE TO SEVERE ECONOMIC IMPACT OF COVID-19 PANDEMIUC
AND HENCE DEF HAD NO SUFFRED ANY LOSS DUE TO INABILITY TO
DELIVER THE SECOND CONSIGNMENT.

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PRAYER

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